Utility Deposit Bonds

What is a utility bond?

Utility bonds (also known as utility deposit bonds) are legally binding contracts between a utility company, a person or entity purchasing services from the utility company, and a surety firm.

The Obligee is the utility company, and it sets forth the duties that the utility client (the Principal) must obey. The surety (also known as a bonding firm) issues the bond, which guarantees the customer's performance.

What is the purpose of a utility bond?

When a person or a business signs up for utility service, they are usually required to put down a cash deposit. The deposit amount is usually determined by the utility's predicted usage. Many utility companies will accept a utility bond instead of a cash deposit.

The premium paid for a bond is often substantially lower than the amount paid for a cash deposit, which is why most consumers prefer bonds to cash deposits.

When a surety business issues a bond, it guarantees that the utility company will be compensated for losses incurred as a result of a customer's failure to pay utility bills.

If a consumer does not pay their utility bill, the surety will reimburse the utility provider up to the bond amount. The consumer is legally responsible for the losses and must reimburse the surety business for any damages paid under the bond.

What is the cost of a utility bond?

The cost of a utility surety bond is determined by the total bond amount and the premium rate. The bond amount is determined by the utility company, and the premium rate, which is a percentage of the entire bond amount, is set by the surety firm.

Utility bonds often have premium rates ranging from 1% to 5% of the total bond amount. The surety firm assesses your credit score and financial soundness during the application process. Good credit applicants usually get the best rates, but weak credit will not preclude you from getting a utility bond.

Texas offers premiums as low as $350.
Tennessee offers premiums as low as $85.
Georgia offers premiums as low as $85.

Most popular Utility Deposit Bonds

• Georgia Utility Deposit Bonds.
• Montana Utility Deposit Bonds.
• Tennessee Utility Deposit Bonds.
• Texas Utility Deposit Bonds.

Other Utility Deposit Bonds categories

• Alabama Utility Deposit Bonds.
• California Utility Deposit Bonds.
• DC Utility Deposit Bonds.
• Florida Utility Deposit Bonds.
• Kentucky Utility Deposit Bonds.
• Massachusetts Utility Deposit Bonds.
• Mississippi Utility Deposit Bonds.
• Missouri Utility Deposit Bonds.
• Nebraska Utility Deposit Bonds.
• New York Utility Deposit Bonds.
• North Carolina Utility Deposit Bonds.
• South Carolina Utility Deposit Bonds.

Read More